Norway's DNO resumes production in Iraqi Kurdistan oil field

Norwegian oil group DNO, a major oil producer in Iraqi Kurdistan, said Thursday it had resumed production at one of its oil fields closed in March due to a Turkish export freeze.

A dispute over oil has long strained relations between authorities in Baghdad, Iraqi Kurdistan – an autonomous region in northern Iraq – and neighbouring Turkey.

Production resumed at the Tawke field last month and it is now pumping an average of 40,000 barrels per day (bpd), DNO said as it presented its quarterly earnings report.

In March, the company announced a planned production halt at its Tawke and Peshkabir fields, which produced 107,000 bpd on average in 2022, or a quarter of Iraqi Kurdistan's oil exports at the time.

But in late March, after years of independent oil exports via Turkey, northern Iraq's Kurdish regional government had no choice but to accept a Paris arbitration court's ruling granting Baghdad the right to oversee all Iraqi oil exports.

After the court ruling, Turkey blocked the transit of Kurdish oil through its pipelines.

Half of the petrol from Tawke is today supplied to the Kurdistan regional government and the other half to local trading companies and delivered by tanker trucks, DNO said.

"While there is no light at the end of the export pipeline, we are seeing the headlights of more and more incoming tanker trucks loading up our Tawke cargoes on a cash-and-carry basis," chief executive Bijan Mossavar-Rahmani said in a statement.

The sale price is variable and on average about half what it was before the field closed, "but the payments are made quickly and directly to DNO", the group said.

The Peshkabir field remains closed.

According to a deal reached between Erbil, the capital of Iraqi Kurdistan, and Baghdad, sales are to go through Iraq's State Organisation for Marketing of Oil (Somo) and the revenue placed on a bank account managed by Erbil and supervised by Baghdad.

But the resumption of exports remains suspended pending an agreement with Turkey.

A visit by Turkey's President Recep Tayyip Erdogan to Iraq, for which no date has been set yet, is expected to see progress made on the issue.

Iraq is the second-biggest member of OPEC, exporting an average of 3.3 million barrels of crude per day.